Energy Misdirection: Revisiting Pres. Obama’s U. of Miami Speech

James H. Rust is a policy advisor for The Heartland Institute, a retired professor of nuclear engineering, and an outspoken critic of unnecessary alarmism over man-made global warming. He funds several scholarships for students majoring in chemical engineering at Purdue University. He currently is delivering a talk titled “America's Failed Energy Policies and The Reason Why.”

President Obama’s Energy Speech at the University of Miami February 23 added more details to his energy thoughts as given by his State Of The Union Speech and 2013 Fiscal Year budget submitted to Congress. An advance copy of President Obama’s Miami Energy Speech posted by Steve Milloy’s Junkscience is giving by the following url: http://junkscience.com/2012/02/23/obamas-miami-energy-speech/

These ideas are based upon curtailing use of fossil fuels, in particular coal, due to fears carbon dioxide produced from combustion causes catastrophic global warming. This motivation will guide future energy policies for the next four years. Policies implemented and policies ignored lead to a dismal economic future for the United States.

The United States has the most abundant fossil fuel reserves in the world, the greatest agriculture system, and the most innovative population which should lead to prosperity for centuries. A few remarks about current energy policies follow:

President Obama decried high gasoline prices and said his opponents will shout the 30-year old solution—”drill, drill, drill”—that has not worked. He said, “anyone who tells you we can drill our way out of this problem doesn’t know what they are talking about…The U. S. consumes more than a fifth of the world’s oil. But we only have 2% of the world’s oil reserves.” President Obama could not be more wrong.

Our annual consumption of oil is about 7 billion barrels. Reserves in Alaska exceed 35 billion barrels of oil, reserves off-shore 29 billion barrels, and oil shale reserves in Texas, Wyoming, Montana, and North Dakota exceed 1 trillion barrels. Another trillion barrels of oil are in Canada’s Alberta province adjacent to Montana. TransCanada’s proposed Keystone XL pipeline, for which President Obama refuses to allow construction, is to transport 700,000 barrels per day of Alberta’s oil to Texas. Individuals with President Obama’s thinking have stalled developing the more than 10 billion barrels of oil in the 2000 acre portion of the 19 million acre Alaskan National Wildlife Refuge for more than 30 years.

President Obama mentioned the United States produced more oil in 2011 than in the past eight years. This is true due to recent increased oil production on state and private lands in North Dakota, and natural gas wells in Texas, Ohio, and Pennsylvania. This is in spite of millions of acres of Western land being declared out of bounds for exploration by the Department of Interior, delays in permitting exploratory drilling in Alaska, and delays in off shore drilling on the East Coast and the Gulf of Mexico. Has Shell Oil Company been given permits to do exploratory drilling off Alaska that it has been seeking for years? The year 2011 had a few glimpses of economic brightness due to increased private sector oil and natural gas production in spite of Obama Administration policies.

President Obama made a big issue of an agreement with Mexico to open 1.5 million acres (2350 square miles) of the Gulf of Mexico for exploration that could yield 172 million barrels of oil and 304 billion cubic feet of natural gas. These numbers may appear large; but they only amount to 9 days consumption of oil and 5 days consumption of natural gas by the United States. This amount of oil that would take decades for delivery to the United States, could be delivered in 250 days by the Keystone XL pipeline. Just one of the new 1100 Megawatt nuclear power plants being constructed near Augusta, GA could save this amount of natural gas in 3.7 years.

President Obama said we need to exploit “every available source of American energy—oil, gas, wind, solar, nuclear, biofuels, and more.” He complains “four billion of your tax dollars subsidizes the oil industry every year.” At the same we need “to double-down on a clean energy industry that’s never been more promising.”

Wind, solar, and nuclear provide electricity and we use very little oil in producing electricity. Thus, these sources provide no immediate relief from oil consumption. For years solar and wind has been provided subsidies of grants or government-guaranteed loans for plant construction, requirements for utilities to buy back electricity from these plants at costs way above conventional electricity costs (feed-in-tariffs), and mandates (renewable portfolio standards–RPS)to use their electricity regardless of cost. California has one of the most stringent mandates in the nation with an RPS of 20 percent renewable electricity by December 31, 2013 and 33 percent by 2020. As of May 2011, the all sector cost of electricity in California was 13.38 cents per kw-hr versus a national average of 9.87—36 percent higher than national average. A string of bankruptcies from solar energy plants show solar energy is not economical–winners are bankruptcy lawyers and losers are tax payers and electricity rate payers.

Biofuels consist mostly of ethanol produced from corn. In 2011, five billion bushels of corn was converted to twelve billion gallons of ethanol which caused the wholesale price of corn to rise to $7 per bushel against $2.50 a few years earlier. Much research show it requires more energy to make ethanol than is contained in the product. The situation will get worse in the future due to mandates from the 2007 Energy Independence and Security Act to use 35 billion gallons of ethanol as fuel by 2022. Wikipedia states a 2010 study by the U. S. Congressional Budget Office found the cost to taxpayers to replace one gallon of gasoline with ethanol was $1.78. The whole country suffers because of food price inflation due to this program. Some policy experts speculated increased worldwide corn prices may have been a primary cause of Arab Spring uprisings that started in January 2011 due to starvation level food prices. Let our farmers export the five billion bushels or more of corn wasted on ethanol production, or its equivalent, to alleviate world hunger.

One of the “more” clean energy forms referred to by President Obama is battery-powered cars. Presently electric car purchasers are given $7500 by the federal and various other amounts by state governments to stimulate sales. In order to stimulate more sales from the dismal 16,000 in 2011, President Obama is proposing raising the “gift” to $10,000 in 2013. Because electric cars cost from $35,000 to over $100,000, these subsidies are clearly for the highest income people in the country. It is easy to show electric cars provide no energy savings because their energy use must be traced back to power plants from which electricity to charge batteries originated. These cars are compacts and their equivalent energy consumption is the order of 30 mpg versus 40 mpg from cars they compete against. About $5 billion has been given as subsidies to manufactures, buyers, and placement of charging stations in homes and elsewhere.

President Obama only mentioned nuclear power once in his speech; but it has promise for extending our fossil fuels hundreds of years in the future. Just one of the two 1100 Megawatt nuclear power plants under construction near Augusta, Georgia could save the consumption of 230 million tons of coal or 5 trillion cubic feet of natural gas during its 60-year lifetime. These numbers represent 23 percent current consumption of coal or natural gas in the United States.

The public may not be aware; but since 1983 all electricity produced by nuclear power paid a fee of 0.1 cents per kilowatt-hour to the federal government for future storage of nuclear waste. The annual fee today is $800 million and cumulative payments the past 28 years has to exceed $16 billion. Back in the 1980s a multi-year search was made all over the United States to find the best location to store nuclear wastes. After much study, it was decided the Nevada Yucca Mountain location was best and construction started to prepare the site. After $13 billion was spent on the project, President Obama decided to stop construction and revisit site selection. After all the work and money spent on Yucca Mountain, it seems inconceivable a better site could be found.

Only a few percent of materials in nuclear power plant spent fuel elements is considered waste. This is a small volume compared to fuel element volume. The majority of materials is uranium and plutonium that can be used as fuel for future power plants. These materials are reclaimed by a process called nuclear fuel reprocessing. To date the United States has not built a facility to reprocess fuel elements from our commercial nuclear power plants. As a result of this policy, spent fuel elements are stored on site at nuclear power plants for times exceeding forty years. One of the lessons learned from the Fukushima Dai-ichi nuclear power plant accident is the presence of spent fuel elements creates problems. It seems prudent for the United States government to reprocess nuclear fuels to remove spent fuels elements from plant sites. This dramatically reduces nuclear wastes volume and allows a site like Yucca Mountain to permanently store materials for thousands of years. Building these facilities will create jobs. Tax payers should not to pay for this project–use fees paid by customers of nuclear power generation.

President Obama’s energy speech was long on words and solved no problems. He suggested expanding subsidies for renewable energy that are a total waste. Solar and wind power plants have lifetimes of 20 to 25 years. After this time there is nothing left to show for money spent. Biofuels are not needed at this time because of our vast fossil fuel reserves. Some projects to conserve oil can be achieved at no cost to taxpayers. Eliminate use of heating oil by extending natural gas pipelines to areas heating oil is used. Due to heating oil costing 6 or 7 times natural gas, customers can pay for pipelines by lowering their heating bills by a factor of two. Once pipelines are paid for, customers receive true cost benefits. Use liquefied natural gas for producing electricity in Hawaii instead of oil. This could substantially reduce electricity cost of 36 cents per kw-hr paid by Hawaiian customers.

President Obama mocked the four billion dollar subsidy given oil companies each year. Is it in the form of taxpayer grants to oil companies for explorations, build pipelines, build refineries, or build filling stations? Is there a mandate forcing citizens to buy gas from a particular company or pay a government selected price? Or is it a tax deduction for costs of doing business that all other forms of business are granted? Oil companies seem like a nice whipping boy in times of stress. That can divert attention away from terrible mistakes in energy policy. There are vast oil reserves across the world. It would not be prudent energy policy driving oil companies to other countries to search for oil as was done in 2010-11. Multi-million dollar rigs that left the Gulf of Mexico in 2010 for exploration in Brazil, Africa, and the Middle East may never come back.

Much attention is devoted to the United State’s loss of employment in the manufacturing sector due to technology improvements and movement of jobs out of country for lower paid employees. Production of energy as coal, uranium, oil, and natural gas is manufacturing. Six hundred tons of coal, four hundred barrels of oil, or ten million cubic feet of natural gas has the same economic value of making a $30,000 car or harvesting 4000 bushels of corn. Millions of high paying jobs can be created to satisfy domestic energy use and an expanding export market. These jobs can’t be outsourced because raw materials are domestic. The beauty of this activity is no government subsidies are required and government revenues increase by trillions of dollars through royalty payments, business and income taxes.

It is difficult to find reasons for energy policies we have today. In this Lenten season it may be wise to fall back on the words of Jesus two millennium ago when on the cross he said, “Father forgive them, for they know not what they do.”

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James H. Rust (BsChE Purdue 1958, SM Nuclear Engineering M.I.T. 1960, PhD Nuclear Engineering Purdue 1965) is a retired nuclear engineering professor from Georgia Tech. Presently, he is a policy adviser for the Heartland Institute, where he actively lectures on energy policy and on climate change.

Dr. Rust has more than fifty years of experience in areas related to energy technology and related public policy through his consulting and publishing firms in Atlanta. He is author of Nuclear Power Plant Engineering (Haralson Publishing Company, 1979); editor of Nuclear Power Safety with Lynn Weaver (Pergamon Press, 1976); and contributing author of Elements of Nuclear Reactor Design (Elsevier Scientific Company, 1977).He also has written or co-authored more than 50 scientific reports and publications.

Energy Misdirection: Revisiting Pres. Obama’s U. of Miami Speech was last modified: January 31st, 2013 by James H. Rust